The premiums on a life insurance policy are typically paid regularly over a specified period of time, for example, until the insured event occurs. Depending on the type of life insurance, the sum insured may only be paid in the event of illness, death of the insured, or other insured events specified in the contract.
Risk insurance
Most often, life insurance involves the realization of one single risk - death. In this case, the policyholder pays for the policy (one-time or in regular payments), and in the event of death, their relatives (or those whom they indicated in the insurance contract as beneficiaries) receive insurance benefit.
Multiple insurance can be called an additional type of risk insurance, when the policyholder receives payment in the event of illness or work injury. The peculiarity of this type of insurance is that the risk can occur at any time, and the policyholder may not have any savings under the policy. The policyholder can choose the type of risk, type of injury, etc., as well as the insurance period. This type of insurance is very popular among representatives of dangerous professions. However, it is important to bear in mind that the insurance company will consider how dangerous the insured person's profession is, and in some cases may refuse insurance or significantly increase the cost of the policy.
Endowment insurance
Endowment life insurance is technically a universal piggy bank, only the funds are accumulated not in a bank account but in an insurance company. Within a certain period, the client pays the full cost of insurance in separate payments. If the insurance event occurs before the expiration of the policy, the insurance company pays the insured amount in full. In terms of profitability, a bank deposit is usually more beneficial. Endowment, however, has its advantages: if the policyholder passes before the end of the accumulation period, their heirs will receive the entire insurance amount, and it may be more than the amount of contributions actually paid. In case with the deposit, the heirs receive only the amount that is on that deposit. Any person chosen by the policyholder and indicated in the insurance contract as a beneficiary can be the final recipient of money.
Investment insurance
In this case, the insurance company acts as an investment player that invests the policyholder’s funds with the expectation of making a profit. The savings can be divided into two parts: firstly, this is the guarantee part, which a person will receive regardless of the market situation, and secondly, the investment part - tied to the level of profitability. The size of guarantee payments is specified in the insurance contract, which one should carefully read in advance.
The client is often offered a choice of several strategy options: aggressive or conservative. The former usually includes investments in less risky instruments, such as bonds, and the latter, in more risky investments, such as shares of growing companies. However, unlike deposits, investment insurance has a serious limitation - such deposits are not insured in any way.
Source: https://www.forbes.com/advisor/life-insurance/life-insurance-quotes/
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